During the first lockdown in 2020, household savings increased by almost 24% according to the Office for National Statistics. Fast forward two years, add in inflation and a cost of living crisis, and our research shows 81% of consumers will be putting less money into their savings account this year.
It’s no secret that we’re all likely to have less disposable income this year, but with an adjusted budget and some planning, you might still be able to add to your savings pot.
A lot of everyday banking apps have a feature that lets you round up your transactions to the nearest pound and put the difference into a savings account.
You might already have a savings account, but with spending habits changing, it may not be as suitable as it used to be. Take a look at the interest rates on offer, how long your money is locked away for and whether you need to save a certain amount each month to get any benefits.
Katie Johnson, MD of savings, notes "customers aren't getting the most out of their savings when saving with high street banks at the moment given the differential between their rates and the rates available at smaller challenger banks. It’s worth shopping around”.
At Hodge, we’ve seen a 0.52% increase in interest rates so far in 2022 (Jan-May), with an average increase of 0.90% in a 2-year period. Find out more about our personal savings accounts here.
Locking away your money for a fixed term might seem dauting, but it can also protect you from dipping into your savings absent-mindedly and give you a better interest rate in the long run. Most fixed rate savings accounts have a term of 1-5 years, so you can choose one that suits you. Then you could try a second, more accessible savings account for everyday needs.
Save as little as £1 every day and see how much difference it makes to your monthly budget. If it’s manageable, knock it up to £2 a day for the second month, then £3 for the third month. You get the picture!
In our blog 10 things to consider when saving, we share tips on budgeting and finding ways to make cuts. Some of those savings will naturally need to go toward everyday expenses (increased petrol costs come to mind!), but where’s the rest going? If you can, set that money aside rather than spending it on something else.
Some of these might seem like small savings, but you’d be surprised how quickly the funds add up. Every so many months, you can transfer the lump sum into a savings account with a higher interest rate to make your savings go even further.
To help you save a little more everyday, you can also use a budgeting app – find some of the best on the market in our best budgeting apps blog.